{"id":3019,"date":"2026-04-03T01:54:35","date_gmt":"2026-04-03T01:54:35","guid":{"rendered":"https:\/\/stock999.top\/?p=3019"},"modified":"2026-04-03T01:54:35","modified_gmt":"2026-04-03T01:54:35","slug":"u-s-gas-prices-are-at-their-highest-since-2022-and-its-primarily-hurting-low-income-households","status":"publish","type":"post","link":"https:\/\/stock999.top\/?p=3019","title":{"rendered":"U.S. gas prices are at their highest since 2022, and it\u2019s primarily hurting low-income households"},"content":{"rendered":"

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The conflict in the Middle East has sent gasoline prices in the U.S. soaring to their highest level in four years. That\u2019s bad news for everybody, but the domestic consequences of the war are likely to ripple unevenly, and in the process undermine one of the country\u2019s primary engines of economic growth.<\/p>\n

Iran\u2019s effective blockade of the Strait of Hormuz has starved the global economy of around 20% of the oil supply it is accustomed to, and Americans are witnessing the effect every time they go past a gas station. Average gasoline prices in the U.S. hit $4 a gallon on Tuesday, the first time that threshold has been crossed since 2022.\u00a0<\/p>\n

And expensive gas is for some households a huge concern. When gasoline prices spike, they drain real disposable income that would otherwise flow into the broader economy, forcing some families into making hard choices about where to put their money. By hurting lower-income households\u2019 spending power and leaving the finances of the wealthy relatively insulated, the war in Iran could add even more fuel to the country\u2019s growing K-shaped economy, according to a Moody\u2019s Analytics report published this week.<\/p>\n

\u201cWhile household consumption remains the primary driver of U.S. economic growth, the ongoing Middle East conflict and resulting surge in oil prices are testing its resilience,\u201d the report\u2019s authors wrote. \u201cIf the conflict is prolonged, the shock would even more meaningfully reduce household purchasing power and weigh on spending.\u201d<\/p>\n

The critical role spending plays<\/p>\n

The U.S. economy is massively reliant on Americans being willing to spend money. At the end of last year, consumer spending accounted for 68% of GDP, according to the Federal Reserve. It\u2019s why spending data is considered a critical economic indicator, and why markets are so closely attuned to releases detailing monthly retail spending and consumer confidence.<\/p>\n

But spending\u2019s outsize role could turn into a dangerously lopsided dependence. Analysts at Moody\u2019s, including Mark Zandi, the firm\u2019s chief economist, have repeatedly sounded the alarm that the bulk of spending comes from a relatively small share of consumers, specifically wealthy ones.\u00a0<\/p>\n

In a report last year, Zandi wrote that the U.S. economy is \u201clargely powered by the well-to-do,\u201d finding that only the top 20% of the country\u2019s income distribution has spent enough to outpace inflation in recent years. By another metric, the 10% of Americans with the highest incomes accounted for nearly half of all consumer spending last year.<\/p>\n

Moody\u2019s has framed the divergence as evidence of a K-shaped economy, one where the highest-income earners are doing better than ever and seeing their wealth grow, while low- and middle-income groups deal with stagnating wages and rising affordability concerns.\u00a0<\/p>\n

The problem of pricey gas<\/p>\n

More expensive fuel could accelerate that trend. Low- and middle-income earners spend larger shares of their wealth on essentials including transportation, food, and housing, meaning their ability to spend in the economy gets squeezed faster when prices for the basics rise.<\/p>\n

\u201cHigher gasoline and utility costs act like a tax on households by reducing real disposable income,\u201d Moody\u2019s analysts wrote in the recent report. \u201cAs consumers spend more on essential goods and services, they will curb spending elsewhere.\u201d\u00a0<\/p>\n

This effective tax arrives at a particularly precarious moment for many Americans, just as real wage gains are beginning to flatten and households are drawing down their savings to near-historic lows, according to Moody\u2019s. Real wages declined 0.3% for low-income workers last year, according to the Economic Policy Institute, a reversal from post-pandemic trends when low- and middle-wage gains were prominent.<\/p>\n

A pricier fuel tax has already had a significant impact on household finances. In the month since the war began, Americans may have paid an extra $8.4 billion on gasoline, according to an analysis published Thursday by Democratic members of the Joint Economic Committee, a standing congressional body.\u00a0<\/p>\n

While the committee did not break down the cost burden by income group, the amount Americans pay at the pump is likely to leave a bigger dent in their overall budget the less they earn. Households in the lowest fifth of incomes spent 18.3% of their wages on gasoline in 2021, more than double the average of 7.7%, according to an analysis by the American Council for an Energy-Efficient Economy, an advocacy group.<\/p>\n

Higher-for-longer gas prices could also hurt wealthier Americans eventually. The Moody\u2019s analysts warned that more expensive fuel will likely \u201cerode some of the boost to household purchasing power\u201d high-income groups would have had from fatter tax refunds this year.\u00a0<\/p>\n

Tax provisions in Donald Trump\u2019s One Big Beautiful Bill Act last year paved the way for larger than usual refunds, primarily benefiting the wealthiest Americans. A recent analysis from Oxford Economics, a consultancy, projected returns this year to rise by $60 billion, but a prolonged period of high gasoline prices will be enough to \u201calmost exactly\u201d offset all of those returns this year.<\/p>\n

#U.S #gas #prices #highest #primarily #hurting #lowincome #households<\/p>\n","protected":false},"excerpt":{"rendered":"

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